Petrol pump dealers in Delhi called off their day-long strike on Friday, saying chief minister Sheila Dikshit has assured them that their grievance over increased VAT eating into diesel sales will be looked into.
About 410 petrol pumps in the national capital were to shut shop on Friday to protest against the hike in the VAT rate on diesel, which was driving vehicles to neighbouring Gurgaon for refueling.
"The chief minister has assured to look into the matter within 15 days," Federation of All-India Petroleum Traders general secretary Ajay Bansal told PTI.
"She has assured (us) that the issue of loss of sales will be closely studied. Following this, we have called-off the protest," he said.
He said sales were drying up as the differential in diesel prices in Delhi and Haryana is almost Rs 4 per litre.
In June, 2008, Haryana reduced the value-added tax on diesel to 8.8 per cent from 12 per cent, thereby making it cheaper than in Delhi, where VAT on the fuel was 12.5 per cent. "From 13.5 crore litres a month, sales of diesel in Delhi came down to 8.5 crore litres a month (loss of 37 per cent)," Bansal said.
The problem was compounded when the Delhi Government on April 1 raised VAT on diesel to 20 per cent.
"This has resulted in a difference of almost Rs 4 per litre in the price of diesel between Delhi and Haryana," he said. Delhi shares a border with Haryana in the north, south and west. It has Uttar Pradesh along its eastern border.
The increase in VAT has made diesel in Delhi more expensive than even UP. A large number of vehicles coming into the national capital from Haryana or UP daily would prefer refueling outside.
"Because of this price differential, we expect a further drop in sales from the present 8.5 crore litres per month to three crore litres per month (a total loss of 80 per cent)," Bansal said.
"As a result, the state is going to suffer heavy revenue loss, to the tune of Rs 325 crore per annum.
"This loss in sales of Delhi petrol pumps will make a very large percentage of them unviable and they will have to close down," he said.
